Long lags make discretionary policy less effective because
A)in the long run,we shall all be dead
B)by the time the impact of a policy is felt,the problem it was meant to cure may have been corrected
C)lags are longer in contractions than in expansions
D)lags are longer in expansions than in contractions
E)automatic stabilizers are subject to longer lags than are discretionary policies

Question

Quizplus · Accepted Answer

Discretionary policies are designed to address economic problems, but if there is a long lag between the implementation of the policy and the time it takes for the impact of the policy to be felt, the problem it was meant to cure may have already been corrected. Therefore, long lags make discretionary policies less effective. Option A is a popular saying by John Maynard Keynes, but it does not relate to the question. Option C and D is irrelevant and incorrect. Option E is a confusing answer as automatic stabilizers are designed to work without any discretionary action, and hence, lags are not relevant to this type of policy.

Long Lags Make Discretionary Policy Less Effective Because